Spend what is left after saving – 3 tips and others tricks.

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I’m thinking and planning for the months ahead and I’ve been exploring a Japanese method of money saving called Kakeibo, it seems pretty easy to follow..

At the beginning of each month, you’re meant to sit down and think about:

  • how much you have to spend
  • how much you want to save
  • what you need to do to reach your goals

During the month, you track the money coming in and going out. Then at the end of each week and month, you add up what you’ve spent, check if you are meeting your savings goals, and think about how you can improve in future. Most of it’s common sense but sometimes it’s good to go back basics.

Start of the month: set savings goals

So according to Kaikeibo, you start the month by working out:

  • Money coming in. If you have a salary, put down the amount that actually hits your account after tax, national insurance etc is taken off. Add on any freelance earnings, savings interest, birthday cash or anything else that bumps up your income.
  • Fixed money going out. This is the essential bills, like rent or mortgage, council tax, gas, electricity, water, broadband, phone, mobile and life assurance. Add on any other fixed monthly payments, like loan repayments and subscriptions.
  • Money left. Take away the fixed money going out from the money coming in – and hope you have some money over! This is the money you can choose whether to spend or save.
  • Savings amount. Decide how much you’d like to save. Sadly, you won’t be able to save all of it, if you still have little things like food to buy.
  • How much you can spend. Now, work out what you have left to spend during the month, after taking off your savings. Divide by the number of weeks until you next get paid, to find out how much you can spend each week.

Spending is divided into four categories which are survival, optional, culture and extra.

  • Survival covers food, transport and health related spending and children’s costs
  • Optional refers to shopping, restaurants and takeaways
  • Culture is for books, films, theatre, cinema and music
  • Extra means gifts or home repairs.

This method forces savers to be aware of where their cash is going, and enables them to make changes. It also highlights any spending that may have got out of control without being noticed, such as takeaways or cabs. Beware of little extras; a small leak will sink a great ship!

Tips for trying Kakeibo

  • Not spending vs spending well. When it comes to saving, don’t think about what you can’t spend, but instead focus on spending well. Make it a positive step rather than a sacrifice.
  • Divide spending ‘needs’ and ‘wants’. A chunk of our monthly spending goes on essentials like council tax, petrol, electricity and rent or mortgage, but much of the rest is variable. Tracking the amount that goes on essentials can help identify where it’s possible to make savings.
  • Set a manageable savings target. Better to set a small savings target at the start, rather than beating yourself up if you aim to save loads but don’t. As you continue tracking your income and spending, you may find it easier to save a larger amount.

When doing some research it appears that most couples and families spend an awful lot on food, food is in the ‘survival’ category but it seems to be a common area of over spending and waste. I find these 3 things can help really reduce your bill:

1) Plan all your meal your meals

2) Stick to the list

3) Shop wisely by comparing brands to shop own products

But before you go shopping start by writing a list of everything you have in your fridge, freezer and cupboards and see what meals you could make – if you’re stuck for ideas then Pinterest and BBC recipe finder are brilliant because you can search by ingredient. Use up that bag of cous cous and get defrosting! Some items become a weekly basics (milk, bread, bananas) but if you have a food plan you know exactly what you need, so for example if you have run out of celery but aren’t using celery in a recipe that week then don’t buy it! Don’t feel you have to replace everything and stock up. Something we do to save a bit on the weekly shop is once or twice a week have a ‘peasants’ dinner’, something simple and cheap like pasta (make your own sauce), jacket potato or left over stir fried veg with rice. Think about have more ‘meat free’ days and take lunch to work, whether it’s made or brought as part of a multipack. We usually take snacks and drinks if we go out as a family, all of these things can work out to be healthier too.

The ‘survival’ category also includes children’s costs but that’s quite a grey area so maybe try to share or swap children’s toys and clothes with your friends and family if things are needed, especially coming into the colder months or if your child needs something more stimulating to play with and you can’t wait till their birthday or Christmas then try Facebook Market place or eBay – ELC have lots in the sale at the moment and you could also sell things too.

You can also reduce the amount you spend on some ‘culture’ items by buying used books, music and films through Amazon or buying kindle versions can work out cheaper.

Sometimes investing in something can actually work out cheaper, we’ve just got a great Sky package deal so now we have access to loads of films, we’ve also ‘borrowed’ Amazon Prime and Netflix details from our family so it means that staying in isn’t dull. M&S dine in 2 for £10 is really good and feels like a treat and is a lot cheaper than a takeaway, probably healthier too. Look for items you could replace with something more environmentally friends – coffee cups, steel water bottle, metal razor, face wash/cleanser rather than cotton wool, hair shampoo bar, soap and washing up liquid refill packs, giant box of cat food or buying in bulk.. amazon can be a good place to look and a Costco membership is even better!

Taking out cash each week or for the month is also a great way of managing your money, it makes me think more about what I’m buying and why.

Get organised when it comes to birthdays and of course Christmas – start thinking about gifts and budgeting now – spreading the cost makes December much easier which also has a knock on effect to January.

Christmas doesn’t need to be expensive but it can be when there are lots of children in the family. Secret Santa can work really in a group of friends (say £20 budget each) or family (£50-£80) or agreeing to just do presents for the children would save a lot of time and money. I completely understand that you want to give your children everything but it’s not worth getting into debt for, children remember much more than which presents they got. What traditions could you start? What memories can you create?

A simple fact that is hard to learn is that the best time to save money is when you have some!

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